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NVIDIA Corporation (NVDA)
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Descartes Systems Group Inc. (The) (DSG)
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Shopify Inc. Class A Subordinate Voting Shares (SHOP)
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Coherent Corp. (COHR)
Q: Hi Peter...I have some cash in my TFSA and I'm considering buying either SHOP or DSG. I like SHOP but I just don't think the large amount of stock based compensation is shareholder friendly. I'm going to spend about $80,000 CAD so I want stock liquidity. I do have a lot of IT companies (NVDA, CSU, LUM, TOI, COHR). Do you think either DSG or SHOP would strengthen my IT grouping? Also do you think I am being unreasonable about SHOP and its stock based compensation? CSU, where the executives have to buy stock in the open market, being so shareholder friendly makes me hesitant with SHOP. Any comments you have would be appreciated.
Thanks,
Jim
Thanks,
Jim
5i Research Answer:
Based on the current stocks noted in the question, we would consider SHOP a better fit, though we continue to like DSG a lot. CSU is a unique animal, and few companies are like it. We would not see it as a fair comparison, really, in terms of stock based compensation (SBC) and company policies. SHOP has created tons of shareholder value in its history. It is growing fast, and SBC is essentially 'needed' to hire employees. The stock is up 69% in a year and this also comes into play. While nobody 'likes' SBC, it is telegraphed well and likely in the stock's valuation anyway.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in NVDA.